The laid back global shipping business has been on the spotlight amid intrigues surrounding maize imports by the government to address flour shortages biting the country.
At the heart of the public debate, which took a political turn, is the ‘record’ speed at which a vessel from Mexico port docked at the Mombasa port with 30,000 tonnes of the grain.
Government officials were accused of playing into the hands of maize cartels or working in cahoots with them. Merchants well versed with the grain business say leveraging on commodity exchange concept, the multibillion business uses huge vessels and dock at places with close proximity to their target markets.
For Kenya, the Durban Harbour in South Africa, which is the largest and busiest shipping terminal in sub-Saharan Africa or Alexandria, Port Said or Damietta on the Mediterranean in Egypt are the closest.
The trade also leverages on chartered ships that offer rented space to importers and exporters along various routes determined by demand and supply of various commodities.
According to OpenSea, a ship chartering marketplace that helps match ship and cargo online, there are many platforms that track ship owners and cargo movers and immediately links them according to the location of the cargo, vessel’s route and the two parties discuss cost and delivery procedures — sometimes on the high seas.
In the case of the ‘Mexico’ maize, the government clarified the maize had been procured by South Africa during a drought last year and excess grains had been stored at the Port of Durban. This business that cuts across the globe is determined by observing balances and imbalances within the global supply and demand chains and shrewd traders placing bets on rising and falling market demands to make profits.
Merchants familiar with the industry say movement of grains — which is the third most sea-bound commodities after iron ore and coal globally — is usually seasonal and shipments increase mainly during the harvest period in main producing countries like the US, Canada and Europe.
Exports peak from December to June each year, during which time demand for shipping services increases considerably to spur the grain market. Commodity exchange platforms where traders buy and sell commodities using virtual platforms are the determinants of movement of commonly traded agriculture commodities such as wheat, corn, maize, oats, rice and soybeans on the international market.
The platforms include the Chicago Board of Trade, Kansai Commodities Exchange, Risk Management Exchange, Minneapolis Grain Exchange, Winnipeg Commodity Exchange, Tokyo Grain Exchange and Euronext.
Regardless of where the commodities are situated, one can buy and sell, and then link up with ship owners for transportation to the various destinations.
Mexico and the US are among the major sources for white maize, which according to Kenyan requirements, have to be non-genetically modified. Apart from East African countries, the Common market for East and Southern Africa is among sources of white maize for the Kenyan market.
Cost is determined by weight of commodities and distance covered by the vessels from point of purchase. Other costs and requirements are locally determined.
Once cargo arrives in Mombasa, it undergoes clearing at the customs and Kenya Port Authority offices carried out by clearing agents. Popular shipping vessels in this trade include the Handysize class which consists of the Supramax — a naval architecture term which means large bulk carriers — and carries between 50,000 to 60,000 Deadweight tonnage (DWT), Handymax (40,000 to 50,000 DWT), and Handy (less than 40,000 DWT). Deadweight tonnage means the weight of the ship plus that of cargo.
Commodities eventually land in Kenya where vessels are soon loaded with products like the Kenyan coffee and tea which has also been bought by traders through an auction for delivery in various destinations globally.
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Mediamax Network Limited
